Compound power in a unique investment: For most salaried class people, an average investment window of 30 years is available in most cases. A person who joins a job at 25 years of age has time to stabilize and build his career. Once they begin to obtain a decent salary, they spend more on their lifestyle and sometimes to improve their skills. At 30, they are in a position where you can start your investment trip. But that is the stage in which most people make a mistake. They delay their investments, thinking that they begin is our bird a great salary package, and that is the error that costs expensive.
They lost important years of growth composed of their investments.
These are the years, if used wisely, they can bring their investments to new heights.
Only a few years, the delay can leave them below many Lakhs of millions of rupees in their retirement corpus. The duration of the investment is powerful, which, if used effectively, can produce outstanding results for its investments.
A smaller investment can build a larger corpus compared to a larger investment made only for a few years.
In the same way, can a unique investment of RS 3.00,000 in a mutual fund scheme generate a retirement corpus that can exceed a fund generated by a global sum of RS 30.00,000 for a shorter duration?
See calculations to get an idea.
How time plays a key role in investment growth
First, see the example of how an investment of RS 1 Lakh in a mutual fund scheme can grow in 40 years with an annualized growth of 12 percent.
In 10 years, the estimated corpus will grow at RS 3.10.585.
In 20 years, the estimated corpus will grow at RS 9.64.629.
In 30 years, the estimated corpus will grow at RS 29.95.992.
In 40 years, the estimated corpus will grow at RS 93.05.097.
Just see the difference in corpus between 20 and 40 years. It is more than 10 times growth.
RS 2 Lakh vs RS 20 Lakh Investment
Here the first amount of investment is only 1/10 of the second quantity. But if RS 2.00,000 grow for 35 years and RS 20.00000 for 14 years, both with an annualized yield of 12 percent, the narrowest amount can generate a corpus higher than the largest amount of investment. Let’s see how.
An investment of RS 2.00,000 in 35 years will grow to an estimated corpus of RS 1.05.59,924, where estimated capital gains will be RS 1.03.59,924.
In contrast, an investment of RS 20.00,000 in 14 years will grow to an estimated corpus of RS 97.74,225, where estimated capital gains will be 77,74,225.
Just look at the estimated capital gains of both investments.
The growth of an investment of RS 2 Lakh in 35 years is far ahead of the investment growth of RS 20 Lakh in 14 years.
Why do we get such contrasts results
These are not contrast results. This is how investments grow due to compound growth, where they obtain return to yield. The investment grows due to the effect of the snowball.
RS 3.00,000 investments compared to RS 30.00,000 investments
Now apply the same logic to these 2 investments.
Here, we will make an investment of RS 3.00,000 for 40 years and an investment of RS 30.00,000 for 19 years. In both, we hope to obtain an annualized yield of 12 percent. Let’s see how big corpus we can get in both cases.
CORPUS OF RS 3.00,000 investment in 40 years
The estimated capital gains of an investment of RS 3.00,000 in 40 years will be RS 2,76,15,291, and the estimated corpus will be RS 2,79,15,291.
RS Corpus 30.00,000 investments in 19 years
The estimated capital gains of an investment of RS 3.00,000 in 40 years will be RS 2.28,38,285, and the estimated corpus will be RS 2.58,38,285.
The difference in estimated capital gains generated is RS 47.77.006. An investment of RS 3.00,000 is the winner.
Cost of investment delay in the race
Considering the examples given above, let’s see the example of the cost of the investment delay.
A 30 -year -old professional wants to start an investment of RS 10000 SIP monthly in a mutual background, with a step forward or 5 percent. They want to do it until they turn 60.
See the results if they start at the ages of 30, 35 and 40.
If they start it at 30, The Total Investment Will Be RS 79.72,662, Estimated Capital Gains Will Be Rs 3.87.85.512 and the estimated corpus will be rs rs rs rs rs rs rs rs rs rs rs rs rs rs rs rs rs rs rs rs rs rs rs rs rs rs rs rs rs rs rs rs rs rs rs rs rs rs rs rs rs rs rs rs rs rs rs rs rs rs rs rs rs rs. RS RS RS RS RS RS RS RS RS RS RS RS RS RS RS RS RS RS.
If they begin at age 35, the total investment will be RS 57,27,252, the estimated capital profits will be RS 1.91,01,233 and the estimated corpus will be RS 2.48.28.485.
If they start at 40, the total investment will be RS 39.67.914, the estimated capital gains will be RS 87.85,809 and the estimated corpus will be RS 1.27.53,723.
Look at the difference in capital gains with a delay or only 5 years.
Conclusion
The conclusion of all the calcals shown above shows that it is always good to start an early investment trip.
With some Lakhs or additional investment, the result can be exceptional.
(Discharge of responsibility: This is not investment advice. Make your own due diligence or consult an expert for financial planning).
